New to rentals? What every number means
If you’re sizing up your first rental, the jargon can bury the point. Here’s every indicator on this page in plain English — what it is, and what a healthy value looks like. None of these is a single pass/fail; read them together.
Monthly cash flow want positive
What’s left each month after every operating expense and the mortgage. The headline number is pre-tax. Positive is the goal — but a few dollars positive with weak ratios is still a thin deal.
Cash-on-cash many aim ≥ 8%
Your yearly cash flow as a percent of the cash you actually put in (down payment, closing, rehab). It answers “what return is my out-of-pocket money earning?”
Cap rate typically 5–10%
NOI ÷ purchase price — the return as if you paid all cash, with no loan. Useful for comparing properties on equal footing. Lower cap rates are common in pricey, high-demand areas.
DSCR lenders want ≥ 1.25
Debt-Service Coverage Ratio = NOI ÷ the mortgage payment. At 1.0 the rent exactly covers the loan; below 1.0 it doesn’t. Lenders like a cushion (often 1.25+) before they’ll finance.
NOI higher is better
Net Operating Income — all rental income minus operating expenses, but before the mortgage. The property’s own earning power, independent of how you finance it.
Gross rent multiplier lower is cheaper
Price ÷ annual gross rent. A quick price tag on the rent you collect — a lower GRM means you’re paying less for each dollar of rent.
1% rule rent ≥ 1% of price
A 10-second screen: is monthly rent at least 1% of the purchase price? It’s a rough filter — many solid deals miss it in expensive markets, so treat it as a flag, not a verdict.
50% rule expenses ≈ 50% of rent
A sanity check that operating expenses (excluding the mortgage) land near half of gross rent. Far below 50% may mean you’ve under-budgeted for vacancy, maintenance, or CapEx.
Break-even rent / vacancy / rate
The point at which monthly cash flow hits exactly $0. Break-even rent is the lowest rent that still works; break-even vacancy is how empty it can sit; break-even rate is how high the mortgage rate can climb before the deal goes negative. More room between these and your real numbers = more safety.
IRR & equity multiple
Full-hold returns. IRR is your annualized return counting every year’s cash flow plus the sale — compare it to other investments. Equity multiple is total cash back ÷ cash in; 2× means you doubled your money.
After-tax cash flow often > pre-tax
Depreciation lets you deduct the building’s value over 27.5 years without spending cash, which lowers taxable rental income. That shelter often makes after-tax cash flow higher than the pre-tax headline. Turn on the Taxes section to see it.
CapEx reserve don’t skip it
Money set aside monthly for big future replacements (roof, HVAC, water heater). It’s real even in months you don’t spend it — itemize by component and useful life for the honest figure.
The four expenses that turn a “good deal” into a money-loser
A rental that looks like +$200/month on a thin calculator is often break-even or negative once you account for the four line items those tools skip: vacancy, property management, maintenance, and a CapEx reserve for big-ticket replacements. None of them hit every month — which is exactly why they’re easy to ignore until the roof or the furnace forces the issue.
We force all four into the model with sensible, editable defaults. The CapEx reserve can be a simple percent of rent or — better — an itemized table where each component (roof, HVAC, water heater, flooring, appliances) contributes its replacement cost divided by its remaining useful life. A percent-of-rent rule badly misprices a property with expensive components and modest rent; itemizing fixes that.
How this calculator works
- Effective gross income = annual rent + other income − vacancy loss.
- Operating expenses = taxes + insurance + HOA + utilities + management + maintenance + CapEx reserve (debt service and income tax excluded).
- NOI = effective gross income − operating expenses.
- Cash flow = NOI − annual mortgage payments (principal & interest).
- Cap rate = NOI ÷ price · cash-on-cash = annual cash flow ÷ cash invested · DSCR = NOI ÷ debt service.
- Break-even rent, vacancy, and interest rate show exactly where the deal flips negative.
- Full-hold return grows rent, expenses, and value year by year, amortizes the loan, sells at the end, and computes IRR and equity multiple.
- After-tax cash flow uses straight-line depreciation over 27.5 years.
Every figure is an estimate from your inputs, computed in your browser. The tax layer hands off to our Quarterly Tax Estimator when you want a payment schedule.
Regional defaults: a realistic starting point
Effective property-tax rates vary roughly tenfold across the country, and most people guess at them badly. Pick a state and we pre-fill the property-tax rate, a typical rental vacancy rate, and a rough insurance estimate from bundled public data — each tagged “regional estimate · edit me” and never overwriting a number you’ve already typed. Rent, rent growth, and appreciation are left to you, because the good data there is licensed and appreciation is a forward-looking guess we won’t auto-assert.
Frequently asked questions
- Why is my cash flow lower than on other calculators?
- Because we include vacancy, management, maintenance, and a CapEx reserve by default. Those reserves are real money even in months you don’t spend them — leaving them out just delays the bad news.
- How does the BRRRR “infinite” return work?
- After a cash-out refinance, your cash-on-cash is annual cash flow ÷ the cash still left in the deal. If the refinance returns at least everything you put in, there’s no capital left to divide by, so the return is effectively infinite — we flag that instead of printing a broken number.
- Does it really run entirely in my browser?
- Yes. Nothing is sent to a server and there’s no account. The “copy link” button encodes your scenario into the URL so you can save or share it privately.
- Are the preset and regional numbers accurate for me?
- They’re reasonable starting estimates, not gospel — edit every field to match your property. That’s when the answer gets useful.